The Realistic Optimist is a newsletter publishing exclusive opinion pieces from VCs and founders around the world.
About this op-ed’s author
Ikuo Hiraishi is a Japanese serial entrepreneur and an angel investor. WebCrew, which he co-founded, went public on the Tokyo Stock Exchange in 2004. In 2007, he sold Interscope, which he also co-founded, to Yahoo! Japan.
Ikuo then led Sunbridge Global Ventures, a seed accelerator based in Tokyo & Silicon Valley. He now runs DreamVision, a unique company with a clear mandate to “globalize” Japan’s startup scene.
Japanese startups: a chronology
The modern Japanese startup ecosystem can be divided into four generations.
The first generation, birthed during the late 90s, included startups that presciently realized the internet’s transformative power. They all had a simple mandate: recreate the real world digitally. This included bringing the traditional retail experience online for example, also known as “e-commerce”.
Founders during the first generation all shared one common trait: they understood the internet’s potential before their peers did. From there, founder demographics varied widely. Hiroshi Mikitani, the founder of Rakuten (“Japan’s Amazon”), holds an MBA from Harvard and worked in banking. Kaneto Kanemoto, the founder of OkWave (“Japan’s Quora”) used to be homeless and launched his startup using his wife’s savings.
The second generation spawned following the burst of the Dot-Com bubble, in the early 2000s. Founders from that generation continued exploring the different types of internet businesses one could build. That resulted in diverse startups. Uzabase launched an online media offering, while Gree and Colopl rode the early mobile gaming wave.
The 2008 financial crisis, crystallized by the Lehman Brothers crash, brought the second generation to an abrupt stop. In Japan, the period was worsened by a highly mediatized fraud scandal involving a listed internet startup, Livedoor. These events all pumped the brakes on the Japanese startup dynamic.
Source: Daiwa Securities (paper document)
The third generation saw the rebirth of the Japanese ecosystem, rising from the financial crisis’ ashes. Startups such as Mercari (e-commerce), Akatsuki (gaming), and SmartNews (news curation app) leveraged the iPhone-boosted mobile app market. That period, ranging from 2009 to 2013, marked a revival of Japan’s muted IPO market and resurrected startup investments.